The Telegraph
 
  This website is ACAP-enabled
IN TODAY'S PAPER
WEEKLY FEATURES
CITIES AND REGIONS
ARCHIVES
Since 1st March, 1999
 
THE TELEGRAPH
 
Calcutta Weather
WeatherTemperature
Min : 15.00°C (-1)
Max : 28.50°C (+1)
Rainfall : 0.00 mm
Relative Humidity:
Max : 95.00% Min : 32.00%
Sunrise : 6:3 AM
Sunset : 4:46 PM
Today
Mainly clear sky. Minimum temperature likely to be around 15°C.
 
CIMA Gallary
Email This Page
Shadow of Dubai sunset

Nov. 27: As the sun was setting on Dubai, India counted possible losses from the emirate’s $59 billion debt repayment crisis.

The stock market shed over 600 points in initial trade today, but recovered to end the day with a 223-point loss on reassurance from the finance and commerce ministries, the Reserve Bank and corporate entities.

Dubai government-owned Dubai World, whose slogan is “The sun never sets on Dubai World”, has announced that it has sought extension of repayment time from lenders on some of its liabilities that total $59 billion till at least May 2010.

Analysts said the crisis wasn’t half as bad as it sounded since only $3.52 billion of debt was due for payment by December 14. Another $9 billion is due over the next four months. The fear is that Dubai will default on all this.

The Indian government said the crisis, which pulled down stock markets across the globe, should not have any major impact on the economy.

C. Rangarajan, chairman of the Prime Minister’s economic advisory council, said: “This particular incident in Dubai may not necessarily assume the magnitude that will have an impact on our growth rate.

The RBI was cautious. Its governor D. Subbarao said: “One lesson that we learnt from the (global financial) crisis is that we must study the developments and measure the extent of the problem and hence study the impact on India.”

Indian corporate exposure in Dubai is marginal. Construction giants like L&T, Punj Lloyd and Voltas have orders from the Gulf but little from Dubai. Voltas has a contract for Burj Dubai — the $20- billion real estate project that is spread over 500 acres. That contract is likely to be completed in a month but no money is due.

Banks said their exposure in Dubai could be Rs 5,000-6,500 crore. Bank of Baroda has about Rs 5,000 crore and SBI less than Rs 1,500 crore, according to a PTI report.

British banks led by HSBC and Standard Chartered have an exposure of close to $50 billion.

Indian banks have exposures of about Rs 2,000 crore to Emaar-MGF, a joint venture between Emaar Properties of Dubai and the Delhi-based MGF group.

Credit-rating agency Moody’s has slashed Emaar Properties to junk bond status.

The big investor is DP World, an arm of Dubai World, which has invested over $2 billion in India and ranks as the biggest investor from the Gulf in this country.

DP World has control of five container terminals — Mundra, Navi Mumbai, Kochi (Kerala), Chennai and Visakhapatnam. Kulpi in Bengal is also on its radar.

The government said it had sought detailed information from all ports associated with DP World, also owned by the emirate government.

“Most likely on Monday, we are going to hold a meeting to assess the situation and take a decision,” a shipping ministry official said.

Estimates are that 10 to 12 per cent of all inward remittances ($52 billion last year) into India come from the UAE, which could dip with the Dubai boom fizzling.

The emirate, which sought to build shining cities in the desert at breakneck speed through the import of foreign residents, finance and labour, promised to stump up the money required to rescue Dubai World.

For the city state’s ruler, Sheikh Mohammed bin Rashid al-Maktoum, however, it looked as if his “vision”, which he outlined in a book and practised by handing celebrities like David Beckham keys to glitzy villas, would be harder to revive.

Beckham did not appear too worried about his Dubai property, gifting himself a Bentley for Thanksgiving, adding to his stable of BMW, Ferrari, Lamborghini, Aston Martin, Porsche and Hummer.

See Business

Top
Email This Page

 More stories in Front Page

  • 2 cops die in rebel ambush
  • Koda dodges vigilance again
  • Lotteries face court wrath
  • After you, your majesty
  • Beckham gifts himself a Bentley
  • Minority snub for capital vote
  • Shadow of Dubai sunset
  • Stars on UK aid mission